In exactly one year, we have witnessed an increase in the price of coconut oil, Coconut, copra and Coconut oil cake from its lowest to highest (so far). We are all talking about it because the price growth has been a whopping 3 times! So, I will try to put some of the wisdom in hindsight on its effects on various stakeholders. Not many in this industry, including us, would have been prepared for this change that seems irreversible now. Till now, inflation has happened on most commodities except Coconut.

Farmers
The price increases should naturally bring cheer to the farmers. But this Time, it didn’t bring them the desired cheer. The price increase is not because of the increasing demand but more because of the scarcity of the commodity. If the farmer had grown 100 nuts last year, sadly, he would have only grown 50 nuts this year. So, despite the 3 times increase in price, his income has only grown by 50%. Farmers have also witnessed similar inflation in the cost of their farm inputs, such as labour, fertilizers, water, and so on.
Farmers generally don’t aspire to grow coconuts as much as they do for other cash crops like Arecanut and Rubber. They only cultivate coconuts for their own consumption and for plant diversity on their farm. Justifiably so, as the coconut price was way below his cost of production. This price increase should rekindle their interest in taking coconut cultivation more seriously. If they do, this should be a great boon for the entire coconut industry.

Usage
Coconut Oil finds widespread use in household cooking, baking applications, soaps, hair oil, body massage and so on. In a few of these applications, there are no easy substitutes and the demand is inelastic. That is why price is continuing to rise unabated.
Coconut from trees was used earlier mostly for making copra and, hence, coconut oil. The price of Coconut and copra was mostly driven by coconut oil and palm oil. Now, the scenario is likely to change. Coconut Oil millers find that the coconuts cultivated don’t come as copra to their factory doors. Instead, Coconut is plucked while it is tender; the yield of coconut trees is also higher when tender Coconut is plucked. Mature coconut (often immature) is used extensively to make Desiccated Coconut. The remaining Coconut that is still dried into copra again finds usage as edible copra (good shape and colour) at a higher price. The residue is available as copra for milling.

Coconut Processor
Profitability-wise, it has been a great period for coconut traders and processors. They buy raw materials, and when they are about to sell the finished goods, the price would have increased. The more stock one is able to hold and the faster one is able to complete the processing cycle, the better the profits are. Earlier, the price increase brought with it some caution; what if the price comes down tomorrow? Now, it has become highly predictable. But it has not been all that rosy.
Working Capital required has increased proportionally. For those with limited working capital, his ability to hold stock has been reduced. A certain level of stock is required to maintain production quality (e.g., times required to dry copra and filter oil through sedimentation). Minimum stock is required to meet sudden demands and ensure supply just in case production has been disrupted. While discussing this with a vendor, he told me about his customers in the coconut oil industry. Those who were once paymasters when it comes to vendor payments have now been delaying his payments.

Adulteration
Extent of adulteration is directly proportional to the price difference between Pure Coconut Oil and its adulterants. Palm Kernel Oil is the often used adulterant owing to its similarities with Coconut Oil. Many other malpractices also go along with adulteration like Underweight and Sales in Black.

Consumer
It is the consumer who has been badly hit by this price increase. He is obviously forced to pay much more. Also, he has to consume adulterated products. In order to keep his expense on cooking oil within budget, he will try substitutes like Palmolein Oil and Sunflower Oil. Worst thing to happen will be when he has changed his edible oil for good, when he doesn’t buy coconut oil again even when the price has come down.

Coconut Oil, compared with other edible oils
Coconut Oil will join edible oils like Ghee, Gingelly Oil and Groundnut Oil as premium, local cooking oils. A place where it rightfully belongs. It should be consumed because people want to consume it and not because it is cheap. Each one of them has a cheaper substitute: Vanaspati for Ghee, Ricebran Oil for Gingelly Oil, and Palm Kernel Oil for Coconut Oil. Palmolein Oil, Sunflower Oil, Soyabean Oil, Cottonseed Oil and Rice-bran Oil will be available to the masses.

The Vendor I am talking about is Weigh Control Systems Pvt. Ltd., particularly Mr. Samarjit Biswas. Weighmatics based in Bangalore are manufacturers of Filling Machines, Weigh Bridges and other weight based control systems. Mr. Biswas is the director of the company.

On the first day after I started my life as a Coconut Oil businessman at Puttur, I went with my father to our coconut oil retail outlet. A customer visited the shop and asked for 2 litres of coconut oil. Father asked me to give it in loose by filling his long bottle. Oil was filled in a 50-litre steel drum. It had to be measured in a measuring container and filled carefully into the bottle through a narrow mouth. As a first-timer, I struggled and spilt the oil all over the place, mostly on the outer surface of the bottle. The customer and my father were both getting frustrated at what was happening, but they didn’t show any of it towards me. Now that a partial quantity was poured, it was difficult to find the balance portion to be filled. Then our helper came out and helped service the customer. Father said, “Don’t worry, it comes out of practice”. I thought it was not my cup of tea that I would dispense oil like that.

I had seen every consumer product dispensed through a vending machine in Japan, and there was absolutely no human being on the vendor side. Items and Quantities are to be selected, cash is to be inserted, the exact change will be dispensed, the bill will be automatically printed, and items will be rendered. How simple, fast and perfect. When they can dispense items like rice and juice bottles that are difficult to dispense, I thought dispensing a liquid like coconut oil should be easy. Though I was not looking for a machine to collect cash, dispense change and print bills, I was at least looking for an oil dispenser, given the Quantity.

I searched the Internet for filling machines using various keywords. I got many results for bottle filling machine that one can use inside the factory for filling bottles in large scale. But couldn’t find one that can be used at a retail counter.

Finally, I came across “Flowmatics”, which is now rebranded as “Weighmatics”. They said they have already supplied many edible oil brands in India and overseas. I requested a quote and got a quote in a beautifully written document. I asked for a few customizations, but the sales executive could only deliver lip service and couldn’t come back to me with a revised offer or concrete actions. I called him on his mobile, and after a few calls, he stopped picking them up. I got desperate and called up the landline. This time, it was a holiday, and instead of the receptionist picking up, somebody else picked up and said, “Hello, Mr Keshava Ram; I am Biswas, the director; how may I help you?”. I explained my requirements, and he listened carefully and said what could be done and what could not be done. He understood that I was a first-timer and offered to educate me through a live demo at his factory in Bangalore. I promptly made a visit there and learnt about the systems. He took a lot of patience in educating a novice in the field. At that time, I felt it was just a marketing pitch, but reflecting back, I realize it was a genuine attempt at educating a prospect.

He also told me about his filling machines that I could use inside the factory for filling bottles, cans and tins. I discussed this with my father and placed an order for three machines: an oil vending machine, a bottle-filling machine, and a tin-filling machine. Before coming for an erection, they gave me a list of things to get done at the site. I promised they would be done by a certain date and they would do their work from that date. Due to inconsistencies from our vendors for plumbing, electricals, fabrication, and civil works, they couldn’t be done. Still, their Service Engineer came and completed his erection works in one day but had to wait for 6 days to do a trial run. Despite that, their service fees didn’t increase.

We were happily using their machines to get our work done. After about 4 months, Vending Machine stopped working. We immediately called them for service and next day their Engineer was here. He immediately found that the cables were cut and how? by rats running around. Even if it was our problem, he didn’t charge any service fees as it was within the warranty period.

I started working on setting up the new company and factory. I managed by hiring a fresh graduate as an Accounts Executive; after some time, the extent of compliance required mounted high, and we were not in a good position to deal with them ourselves and with the local Auditor. I tried through various references and on the Internet, but the options I got were either not good enough or were too expensive. I rang up Mr Biswas and requested help; he said, “Don’t worry, I will request my company’s auditor and see if he can help you.” These auditors are always short of time and don’t want to take up any new accounts. The auditor sort of agreed and set up a meeting with me and Biswas. The Auditor said, “Normally, we don’t take any new accounts, even if they are multinational software companies; we only took yours because you have come through Biswas’s reference”. The Auditor has served us well over the last 2.5 years.

For filtering systems, we need to pump oil at a pressure, and the flow has to be adjusted based on the filtering speed, which varies with the cycle. One solution is to have bypass valves that release excess flow. A better solution is to have a Variable Frequency Drive (VFD) when the speed of the motor can be adjusted at run-time. When I tried looking for vendors, their quotes were very high and many times higher than the cost of the pump itself. Again, Biswas gave me a reference for a Vendor in Chennai who offered at a reasonable rate. In between, I asked for several other references. But many of them didn’t work either. For Pouch Packing Machine, Air Heater and Centrifugal Blower, Screw Conveyor and Fabrication services. He even shared references of a couple of distributors who may be interested in selling our coconut oil. He has also shared with me many industry insights that helped me learn more about the industry in which I operate.

We have later purchased Volumetric Bottle Filling Machine, Load Cells for Copra Tank Weighing systems. He has set sight of selling me a Weigh Bridge one day. I have recommended his products to other oil millers and industries. He has got a few orders from them.

In our very first meeting, he used to call up people and refer to me as his friend. I used to think it was just a lame marketing tactic. But over the years, I have realized he really meant it. Most vendors talk rubbish, but they give good customer service and cater to their needs. Again, his company has gone the extra mile to meet our needs. He has a team of service engineers to service his machines all over. He isn’t motivated towards service because it is his business or it is good for business, but because he believes his customers need the service. While in distress or at good times, he calls me, or I call him. We share jokes; to be specific, he cracks jokes, and I just laugh both Veg and Non-Veg, and he tells me various stories/incidences from his vast experience. He looks young for a man in his early 50s; more importantly, he thinks he is young.

When one customer was bargaining over phone for a machine in front of me, he said, “I have already given you the best price. Please understand, if you are to grow, you need suppliers also. They are the pillars of support for any business”. Good suppliers can indeed be strong pillars on which business builds.

cocoguru.com now has a new website and design. This is the 3rd design since it started. This time, the speciality is that the site is all self-developed. Here, I would like to share our development process and ideas.

Domain registration for cocoguru.com was done earlier with godaddy.com. Hosting was also done at godaddy.com’s server. Being a market leader in web domain and hosting space, it is also the best in business with minimum downtime and reliable service. Dealing with free hosts or any local hosting space provider can be painful at times.

Website static pages can be developed with HTML on a text editor or HTML editors like Dreamweaver. Also, websites can be developed with dynamic pages using Content Management System (CMS) software. They provide easy user interfaces where even common users can develop and maintain website pages. WordPress, Joomla, and Drupal are among the popular CMS software. WordPress.org from Automattic Inc. is the most popular free, open-source platform for website and blog development. Countless themes are designed, and plugins are developed to make the complete ecosystem pretty strong and vibrant. The latest version of WordPress 3.5 was installed directly from Godaddy’s hosting dashboard. Then, the complete website design and development is done by logging into the WordPress dashboard.

We strongly believe in minimalism, where the focus is only on what is required, i.e. content, and anything unwanted, i.e. flashy designs, is ruthlessly deleted. The latest default theme for WordPress, Twenty Twelve, was chosen for this site. It is free, and there are many other themes, some of which are paid. Once a theme is selected and systematically followed, the site developer can write his contents plainly in text and not bother about formatting. There may be some aspects of the theme that you may not like; they can be modified if you can, or you will have to just live with them. A few free plugins like Akismet (for spam protection), mappress (for showing maps), tablepress (for tables), sharethis (for social sharing buttons), formbuilder (for creating forms), etc., were installed.

Website pages can be developed by adding pages, and Blogs can be created by just adding posts. The WordPress dashboard has an easy Visual and Text editor for adding content. Each page/post comes with a comment form and a button for sharing on Facebook, Twitter, LinkedIn, Google+, and email. The header, Footer, and Menu are common to all pages and posts.

The content posted is genuinely about us. I wrote it, and it is not a website development company. None of the text or photos are copied from other sites. They are free from jargon/exaggerations like customer satisfaction, high quality, modern infrastructure, excellent service, social responsibility, striving towards growth, etc. Photos are again taken by me with minimal editing to just crop the required portion. Information is openly shared to enable viewers to clearly understand about us.

Key Message
Small businesses need not use the services of Web Designers to get their website done. They will charge anywhere between 15,000 Rupees to 35,000 Rupees to get a flashy website done. Instead, you could do it yourself and write great content to attract visitors.

What Next
The present template is Twenty Twelve as it is. It needs to be customized to get the Cocoguru brand’s feel. More content is to be updated to make the site content rich.